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AST & Corporate Let Agreements – Do you know the difference?

Property to let sign

Are you letting your property to a limited company using an AST agreement?

We have previously seen many landlords using the wrong tenancy agreement when letting their property to a limited company. If the incorrect tenancy agreement is used, the agreement could become invalid.

An Assured Shorthold Tenancy Agreement (AST) can only be used when the tenant is an individual/group of individuals, however, we still come across landlords unaware of this.

An AST can only be used if the landlord is a limited company, but the critical difference is when the tenant is a limited company.

When the tenant is a corporate entity, the property must be let using a Corporate Let Agreement, also known as a Company Let Agreement.

What is a Corporate / Company Let Agreement?

A Corporate Let Agreement is a tenancy agreement specifically used when the tenant of a property is a limited company.

The main difference is that the Housing Act 1988 governs ASTs and does not cover limited companies or other corporate entities.

Rather than ASTs, Corporate Let Agreements are governed under common law; where rent increases, evictions & tenancy deposits are managed differently.

Do Buy-to-Let mortgage lenders accept Corporate Let agreements?

Several Buy-to-Let mortgage lenders can accept Corporate Let Agreements. In this instance, you must get a Corporate Let Agreement drawn up by a solicitor who thoroughly understands property law.

We have previously had instances where clients have downloaded templates from the internet, only for these to be declined by lenders due to them being unlawful.

Where can I find a Company / Corporate Tenancy Agreement Template acceptable to lenders?

The National Residential Landlord Association (NRLA), the UK’s largest membership organisation for private residential landlords, have worked alongside solicitors and created a Company Let Agreement.

As advisers, we would always pre-refer a company let agreement to a mortgage lender ahead of an application, for the assurance that this is acceptable to the lender. In this instance, I have referred the NRLA company let tenancy agreement to several buy-to-let mortgage lenders who have confirmed this is an agreement they could consider; ultimately, it is down to a lender’s solicitor to confirm it is acceptable.

The link below takes you to the NRLA website, where you can download a copy of the agreement for a relatively small fee, or if you become a member, you can access this tenancy template and many more, all for free. We also recommended you seek independent legal advice from a solicitor as well.

Company Let Agreement For Landlords | NRLA

How can Advocate Finance help?

Advocate Finance are experts in arranging funding solutions for Corporate and Company Lets. Thanks to our wide panel of lenders, we can find a lender suitable for your individual funding needs. Take a look at our latest testimonials to read what our clients have to say about Advocate Finance.

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